Owners of Waterford property embroiled in dispute; back taxes, penalties add up to almost $80,000

Waterford - The periwinkle paint on the two-story building is peeling, the creaky chain-link gate blocking off a small parking lot is plastered with "Beware of Dog" and "No Trespassing" signs, and the out-of-town owners of the property at the end of Lower Bartlett Road have been delinquent in paying their property taxes.

New York-based firms Working Realty Ltd. and MacArthur Properties Ventures LLC purchased the 52 Lower Bartlett Road property, located just past a set of train tracks, from propane company AmeriGas in 2006, for $570,000, according to town land records. Court records show that each party owns half the property, which overlooks the Thames River.

Together, the firms owe $79,278.38 in back taxes and interest, according to Town Attorney Nick Kepple's office.

"It's a lot," he said.

The 5.5-acre property is listed on showcase.com by Josh Prottas, who is listed on the New York Secretary of State website as the CEO of Working Realty. The asking price is $1 million.

"Located on the Thames River, this two story building is available for sale. The building and land are also for sale and for lease. Please contact Josh Prottas for pricing," the listing states.

The owners have been behind on their taxes since they bought the property, making a partial payment of about $40,000 in 2010 in response to a letter from the town before lapsing again, Kepple said. The town initiated foreclosure proceedings against the owners in 2012, but no judgment of foreclosure has been issued.

The town's lawsuit has company.

Eric J. Shames, who claims in court files to own 100 percent of Working Realty's stake in the property, has sued one or both of the firms three times since 2010. Shames' address as listed in court paperwork places him as an attorney in Manhattan.

First Selectman Daniel Steward said the lawsuits between Shames and Prottas don't interest the town.

"If they want to sell their property or they want to change ownership, that's up to them. We just want the taxes paid," he said.

The scope of the lawsuits is restricted to conflicts between Shames and the property's owners of record, mostly between Shames and Prottas. Still, with the latest action questioning ownership of the property, the friction between Shames and Prottas appears to have played a role in the taxes not being paid to the town.

Shames' first lawsuit, which accused MacArthur, Working Realty and their CEOs of fraud, elucidated the relationship between him and the owners of record.

The original complaint stated that Shames and Prottas began engaging in investments together as partners in 1999 and began discussing investing in the Waterford property in the summer of 2006. They purchased the property that September. The complaint stated that the partnership "was never reduced to writing and there is no operating agreement."

The complaint asserted that Shames provided Prottas with $300,000 to purchase his share of the property and that MacArthur also provided Shames with funding. Shames said in the suit that Prottas did not disclose other partners to Shames until Shames allegedly suggested selling the property in 2008.

A jury did not find in favor of Shames at a civil trial. MacArthur and the CEO of its parent company, Antony Contomichalos, were eventually removed from the lawsuit.

A suit filed in 2012 by Shames against Prottas called for dissolution of the firm WISP Partners, of which the two were apparently members. The suit claimed that Prottas' actions endangered Shames' "financial well being" by leading to the Town of Norwich filing six lawsuits against the firm. According to the complaint, the firm had purchased property on West Thames Street.

The case was dismissed without prejudice in June of this year. Also in June, Shames filed a third lawsuit against Working Realty, this time requesting that title to the Waterford property be transferred from the firm to Shames.

"This is a lawsuit that's been filed after a previous lawsuit that went to a jury trial," Working Realty's attorney, Eric Callahan, said of the latest case.

"Call him (Shames) and ask him what he's trying to accomplish," Callahan said.

Shames and the attorney for MacArthur could not be reached for comment last week.

Kepple wrote in an email Friday that the town was planning to order an appraisal of the property, as required for seeking judgment in a foreclosure suit. Due to the expense of getting an appraisal, Kepple said he was making arrangements to discuss alternatives to foreclosure with the other attorneys.

Should the court order a sale or auction, the town would receive the back taxes from the proceeds of the sale. A deal between the town and the property owners now would stave off an auction and could make foreclosure unnecessary.

A real estate agent who was at the premises on Lower Bartlett Road Friday said that the real estate firm for which he works was renting space in the building on site from Working Realty. He declined to state his name or that of the agency he works for.

Town officials said they believe the property provided propane storage for AmeriGas when the company owned the property. An AmeriGas sign still stands in front of the property.

Kepple said that his firm is currently handling more than 80 delinquent tax cases for the town and tries to work with those who are behind.

"A lot of individuals and businesses are struggling, so that's part of the landscape," Kepple said as a way of providing context, referencing the financial crisis of 2007-08.